OTHER PERCENTAGE TAXES SUMMARY

Sect 116: Tax • Not VAT-registered

on person • annual gross sales/receipts ≤ 3M
exempt from • VAT-exempt under Section 109(1)(CC)
VAT o NOT exempt from VAT under Section 109(1)(A) to 109(1)(BB)
• must NOT be subject sa OPT under Sec. 117 to 127

Tax Base (gross sales/receipts) xx

x Tax Rate
Before July 1, 2020 3%
July 1, 2020 to June 30, 2023 1%
From July 1, 2023 3%
PERCENTAGE TAX DUE xx

• may option ang taxpayer to be VAT-registered pero irrevocable ito for a period of 3 years.
• Annual gross sales/receipts should EXCLUDE VAT-exempt goods/services
• if during 2020 taxable year, half of the gross sales/receipts shall be subject to 3% OPT and the other half shall
be subject to 1% OPT; or just simply use 2% rate.
o transitory rate = 2%

TRANSITORY PERIOD FOR THE REDUCED TAX RATE FROM 3% TO 1%

• RR 4-2021 = Ang excess percentage tax payments as a result of decrease of OPT rate from 3% to 1% (beg. July
1, 2020) ay allowed i-carry forward sa succeeding quarter/s by reflecting the excess percentage tax payment
under Line 17 of the Percentage Tax Return (BIR Form 2551Q), “Other Tax Credit/Payment”, specifying therein
as “Carrt-over excess percentage tax paid on previous quarter/s”
• Example:
o Gross sales, 4th quarter of 2020, P200,000. The applicable percentage tax was paid on Jan. 25, 2021
o Gross sales, 1st quarter of 2021, P600,000
• Computation:

OPT, 1st quarter of 2021 6,000

• 600,000 x 1%
Excess percentage tax paid for the 4th quarter in 2020 (4,000)
• 200,000 x 2%, difference of 3% and 1%
Percentage Tax Payable 2,000

Sec. 117: BUSINESS TAXES OF DOMESTIC COMMON CARRIERS

Percentage tax TRANSPORT OF BUSINESS TAX
on domestic BY LAND
carriers and (WITHIN THE PHIL LANG)
keepers of
Passengers • 3% CCT (Sect. 117)
garages
• Regardless of gross receipts
o Cars for rent (rent-a-car business)
AKA Common
o Cars for hire driven by the lessee
Carriers Tax
o Transportation contractors including
(CCT)
those who transport passengers such as
tourist buses for hire
o Keepers of garages

Goods/Cargoes • 12% VAT

• OR OPT Sec. 116 if Gross Receipts ≤
3M & non-VAT registered

BY AIR or SEA
(WITHIN THE PHIL LANG)
Passengers • 12% VAT
Goods/Cargoes • OR OPT Sec. 116 if Gross Receipts ≤
3M & non-VAT registered

INTERNATIONAL FLIGHTS/SHIPMENTS
(PHIL TO ABROAD)
Passengers • VAT-registered
Goods/Cargoes o 0% VAT
• Non-VAT registered
o Business Tax-exempt

NOTE:
• VAT ay imposed lang sa sale of goods and services rendered sa Pinas
o Transport ng passengers and/or goods from international flights ng domestic
common carriers are NOT subject sa VAT
• Transport operations ng mga common carriers mula abroad ay HINDI subject sa
business tax dito sa Pinas
o Phil to Abroad lang ang pwede
 OTHER PERCENTAGE TAXES SUMMARY
• business taxes for Transportation Network Companies (TNCs) or Transportation Network Vehicle System
(TNVS) and “partners”
o With valid Certificate of Public Convenience (CPC)
➢ 3% CCT under Sect. 117
o Without valid CPC
➢ Subject to either 12% VAT or 3% or 1% OPT under Sect. 116

Sec. 118: INTERNATIONAL CARRIERS

Percentage tax (RESIDENT FOREIGN CORPORATION)
on international TRANSPORT OF ORIGINATING IN THE PHIL
carriers Passengers • Business Taxes EXEMPT:
o VAT
AKA CCT on o Percentage Tax
International
Cargo or goods • NOT subject sa VAT
Carriers
• Subject sa Other Percentage Tax under Sec. 118
o Common Carrier’s Tax (CCT) on International Carriers
o 3% based on gross receipts

• HINDI applicable ang reciprocity rule sa OPT Sec. 118

o sa income taxation lang ng international carriers
Sec. 119: Tax SUMMARY OF BUSINESS TAXES FOR FRANCHISE GRANTEES
on franchise

AKA Franchise TYPE OF FRANCHISE BUSINESS TAX

Tax GRANTOR: GOVERNMENT
Radio/Television Broadcasting Companies • 3% OPT
• 12% VAT if registered OR if gross
receipts > 10M for the preceding year
May option to become VAT-registered and once o Determinant lang si 10M ah? Sa
exercised, irrevocable na ito current year’s gross receipt mo pa rin
i-apply ang 3% or 12%
Gas & Water Utilities • 2% OPT, regardless of the gross receipts
All other types • 12% VAT
• OR 3% OPT under Sec. 116
Like electric companies, Meralco ganern o if Gross Receipts ≤ 3M & non-VAT
registered
GRANTOR: PRIVATE COMPANIES
ALL Types of Franchise • 12% VAT
• OR 3% OPT under Sec. 116
o if Gross Receipts ≤ 3M & non-VAT
registered
Sec. 120: Tax • 10% OPT
on overseas • Overseas dispatch, message, or conversation transmitted FROM the Phil.
dispatch, • payable by the user of services/facility NOT the ones who provide the services (or the owner of the facility)
message or o payable nating customers, withholding agent lang si Smart at Globe
conversation • Exempt from OCT:
originating from o Government
the Philippines. o Diplomatic Services
o International Organization
AKA Overseas o News Services
Communication
Tax (OCT)
Sec. 121: Tax KIND OF INCOME TAX RATE
on banks and
non-bank a. Interest, commissions and discounts from lending activities and financial
financial leasing on the basis of remaining maturities of instruments from which
intermediaries such interests are derived
➢ Provided that in the case the maturity period is shortened thru pretermination,
AKA Gross ‘yong maturity date shall be deemed to end as of the date of
Receipts Tax pretermination; correct tax rate shall be applied accordingly
(GRT) • Maturity period ≤ 5 yrs 5%
o Short-term
• Maturity period > 5 yrs 1%
o Long-term
a. Dividends and equity shares in net income of subsidiaries 0%
b. Royalties, rentals of property, real or personal, profits from exchange and 7%
all other items treated as gross income under Sec. 32 of the Tax Code

d. Net trading gains within the taxable year on foreign currency, debts and 7%
securities, derivative, and other similar financial instruments
• net trading gain = cumulative, so kung 2019 ay loss; so walang GRT.
Ngayong 2020, gain naman; so subject sa GRT. Deduct mo muna ‘yong
loss noong 2019 sa gain ngayong 2020, atsaka mo i-multiply sa 7%
• Basis for the calculation of gross receipts?
o Generally accepted accounting principles prescribed by the BSP
 OTHER PERCENTAGE TAXES SUMMARY
Sec. 122: Tax KIND OF INCOME TAX RATE
on other non-
bank financial Maturity period ≤ 5 yrs 5%
intermediaries • Short-term

Maturity period > 5 yrs 1%

• Long-term
• Provided that in the case the maturity period is shortened thru pretermination,
‘yong maturity date shall be deemed to end as of the date of pretermination;
correct tax rat shall be applied accordingly
• Basis for the calculation of gross receipts?
o Generally accepted accounting principles prescribed by the SEC

• Anong pinagkaiba sa 121?

o walang 0%
o 5% na lang ang sa other income
o wala ring 7% sa net trading gains

• Money changers
o Subject to percentage tax under Sec. 121
• Pawnshops
o Subject to percentage tax under Sec. 122
• Lending investors & dealers in securities
o subject to 12% VAT, basis = gross receipts
• Under RMC 9-2016
o Non-Stock Saving and Loan Associations (NSSLAs) are classified as Other Non-Bank Financial
intermediaries NOT performing quasi-banking operations
➢ subject to GRT under Sec. 122

Sec. 123: Tax • 2% of premiums collected

on life insurance • EXCEPT purely cooperative companies or associations, conducted by the members, money collected
premiums and to be used solely for their own protection, NOT for profit.
• the ff. shall NOT be included in the taxable receipts:
1. premiums refunded within 6 months after payment on account of rejection of risk or returned for other
reasons to the insured.
2. Reinsurance premiums where tax has previously been paid.
➢ halimawa ABC Corp ay insurance company, so pwede sila (ABC Corp) na magpa-reinsure din sa mas
malaking company, e.g, XYZ Corp. Just in case na may mag-claim na client ni ABC, protected sila (ABC
Corp.) kasi na-reinsure din sila ng XYZ Corp.
3. Premiums collected or received by any branch of a domestic corporation, firm, or association doing
business OUTSIDE the Phil. on account of ANY LIFE insurance of a nonresident insured, if any tax on
such premium is imposed by a foreign country where the branch is established.
4. Premiums collected or received on account of re-insurance, if the insured, in case of personal insurance
resides outside the Phil., if any tax on such premiums is imposed by a foreign country where the original
insurance has been issued or perfected.
5. Portion of the premiums collected or received by the insurance companies on variable contracts (as
defined in Sec. 232(2) of P.D. 612) in excess of the amounts necessary to insure the lives of the variable
contract workers.
Sec. 124: Tax • Agents of nonresident foreign insurance companies
on agents of ➢ 4% of premiums paid
foreign • Owners of property who obtain insurance directly from foreign companies.
insurance ➢ 5% of premiums paid
companies

**non-life
insurance ito
Sec. 125: AMUSEMENT PLACE OPT RATE
Amusement
Jai-alai and racetracks 30%
taxes
Cockpits, cabarets, night or day clubs 18%
o videoke bars
o karaoke bars
o karaoke televisions
o karaoke boxes & music lounges
➢ e-sabong (5% franchise tax NOT under OPT sec. 125)
Professional basketball games (PD 871) 15%

• in lieu of all the other percentage taxes, whatever nature and

description.

Boxing exhibitions 10%

• Boxing exhibition: World or Oriental Championships

o EXEMPT
o Provided:
1. kahit isa sa lumalaban ay Pinoy
 OTHER PERCENTAGE TAXES SUMMARY
2. Promoted ng isang Pinoy o ng mga Pinoy or promoted ng
isang corporation or association kung saan 60% of the
capital is owned by the Filipino citz.

• Based on gross receipts

o ALL receipts of the proprietor, lessee, or operator of the amusement place
Sec. 126: Tax TAX ON WINNINGS
on winnings
TAXPAYER WINNINGS FROM RATE BASIS
Bettor Regular Bet 10% Winnings or dividends (actual
amount paid to him for every
winning ticket) less cost of
ticket

➢ simply, net winnings

Bettor Special winning: 4% Winnings or dividends (actual
amount paid to him for every
Double, forecast/quinella, and winning ticket) less cost of
trifecta bets ticket

simply, net winnings

Horse Owners 10% Gross winnings

• the operator, manager, or person in charge sa horse race:

o shall withhold the said tax
o shall remit it within 20 days from the date na binawas and winithheld ang tax

Sec. 127: Tax • 6/10 of 1% (simply .006)

on sale, barter or • Basis: gross selling price or gross value in money of the shares of stock sold, bartered, exchanged, or
exchange of otherwise disposed
shares of stock o any gain or loss from sale or exchange shall be ignored
listed and traded • shares of stock must be listed and traded through the local stock exchange
through the local o NOT sold by a dealer in securities
stock exchange • to be paid by the seller or transferors:
o individual taxpayer
AKA Stock ▪ whether citizen or alien
Transaction o Corporate taxpayer
Tax (STT) ▪ whether domestic or foreign
o other taxpayers not failing under (a) and (b)
▪ such as estate, trust, trust funds, and pension funds

TAKE NOTE:

• Percentage Taxes, except STT under Sec. 127 (A) and (B):
o classified as operating expenses for income tax purposes
• “Collections”
o deemed inclusive of VAT, if applicable